5% hike in electricity bills approved

CUSTOMERS are facing hikes of 4%-5% in their electricity bills as the Energy Regulator has given its approval to the placing of a €157 million levy on all electricity users.

Pharmachemical Ireland, a branch of IBEC, has also written to the Commission for Energy Regulation (CER) warning that the levy will cost between 550 and 800 jobs as multinational companies are under pressure from head office to cut costs. Up to 50,000 direct and indirect jobs are provided for by this sector.

At present, the Public Service Obligation (PSO) levy is charged at a rate of 0%. However, the CER wants up to €157m in levies to be paid by consumers to electricity suppliers between October 2010 and October 2011.

The PSO levy was established by the Department of Public Enterprise in 1999 and is levied upon customers to offset costs faced by the likes of the ESB and Airtricty because of their state obligation to buy a certain percentage of peat generated and renewable electricity. These peat and renewal energy obligations are aimed at improving the country’s security of energy supply and at driving the renewables sector.

The Labour Party has described the increase as “bad news for business and bad news for consumers”.

The levies are calculated on an annual basis, depending on the costs likely to be incurred by the ESB to meet its PSO each year.

A 5% increase in the levy would mean an extra €40 charge on the average €800 annual electricity bill.

The Irish Hotels Federation rejected the CER’s decision as “outrageous”. It claims hotels will have energy increases of up to €7,000 per year.

Labour party spokesman on energy Deputy Liz McManus said the price hike comes at a time when people and businesses are “put to the pin of their collar as a result of job losses and reductions in income”.

IHF president Paul Gallagher said they fear that the levy is going to increase.

“This decision is short- sighted in the extreme and shows an astonishing disregard for the economic realities faced by businesses on the ground. We are calling on Minister Eamon Ryan to personally intervene and defer the levies as there is currently no capacity for businesses to absorb additional costs,” he said.

“We are very concerned about future levels of the PSO levy and are calling for a fundamental review of the scope and burden of the PSO, including the projected burden in the coming years. The danger is that there will be continuous increases in the future,” he said.

Deputy McManus has called upon the minister to take the €200m raised from the carbon levies to subvent the cost of the PSO on small business.

“At the time Minister Ryan said that it was his intention that the money raised under the carbon levy would be used to alleviate the burden of electricity bill increases on large energy users. I believe that he should now re-examine this and take a look at the impact energy costs are having on smaller businesses like hotels and guest houses that are suffering as a result in the dramatic slump in visitor numbers this year,” she said.

A CER spokesman and a spokesman for the Department of Energy were unavailable for comment last night.